US Smaller Companies funds rocketed following the US election in November, with an average gain of 11.94% for the sector, while the Russell 2000 bounced up 8.89%, beating out S&P and Nasdaq.
Following smaller companies, the financials and financial innovation sector returned 9.16% in the month while North America returned 7.22%. In the worst-performing sectors, Latin American led with an average loss of 4.84% and China following with a loss of 2.25%. Trump has previously voiced strict policies against both regions, with tariffs being a hot topic of discussion following his win.
Ben Yearsley, director of Fairview Investing Limited, said: “After Donald Trump’s decisive victory in the recent election and his Republican Party gaining control of both houses of Congress, it wasn’t a surprise seeing a strong rally in US equities.
“This is despite many strategists’ pre-election saying a split presidency/congress would be the best outcome. Markets like certainty even if that comes with a large dose of unpredictability. The certainty comes from Republicans being charge of all parts of the US executive, the uncertainty comes from not knowing what President Trump will do or say next.”
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All of the top ten performing funds for November were US strategies, led by Morgan Stanley INVF US Growth with a return of 23.83%. Artemis, Alger, Driehaus, Franklin Templeton, New Capital and Baillie Gifford also made the list with US strategies, all with returns above 14%.
“The combination of upwardly moving markets and dollar strength meant US equities had a stranglehold on the top ten – though it was split between North America and North American Smaller Companies,” Yearsley said.
“Morgan Stanley took the top two places with Artemis US Smaller Companies managed by Cormac Weldon hot on their heels. Even Baillie Gifford joined the party – frothy valuations anyone?”
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Gold funds sunk to the bottom for returns in November, with the Charteris Gold & Precious Metals fund losing 12.9%, followed by Baker Steel Gold & Precious Metals. However, Yearsley noted this is despite gold falling less than $100 and staying 25% above last year’s price.
Across investment trusts, CATco Reinsurance Opportunities topped the list with confirmation of its windup, followed by Seraphim Space with a return of 28.6% and Baillie Gifford US Growth at 24.88%.
“There have been 14 mergers, and the number of trusts has fallen from 327 at the turn of the year to stand at 299 now,” Yearsley said.
“With fund raising tough to come by when many trusts sit on double digit discounts, that number will surely continue to shrink. Looking at performance last month and there wasn’t much difference between open and closed end products with North American Smaller Companies topping the charts with a gain of almost 19%.”
